Alistair Darling, Chancellor of the Exchequer, said the Council of Mortgage Lenders (CML) “clearly misunderstood” his comments on a return to 2007 mortgage levels.

Speaking in Parliament, George Osborne, Conservative Shadow Chancellor, referred to CML’s comments that a return to 2007 lending levels would be “neither prudent nor desirable”. But Darling said the CML had “clearly misunderstood” the Government and clarified that the Treasury statement called only on the Royal Bank of Scotland and the merged Lloyds TSB / HBOS bank to provide the same “credit availability” to individuals and small businesses as in 2007. He said his statement did not apply to the whole mortgage market and insisted that even those banks it did affect would still be expected to assess individual loan applications prudently.

The CML earlier called for clarity over the Treasury’s statement calling for banks to commit to “the availability and active marketing of competitively-priced lending to homeowners and to small businesses at 2007 levels” and “support for schemes to help people struggling with mortgage payments to stay in their homes and to support the expansion of financial capability initiatives”.

But the CML has since welcomed the Government’s clarification that the commitment to restoring flows of lending to the market is “namely an aspiration to achieving a broad, deep mortgage market in general with a good spread of products enabling access to the mortgage market for all credit-worthy borrowers”.